Japan, China stocks jump; India slides on budget

Sydney, Tokyo stocks soar in February, as Shanghai shares decline

By

SarahTurner

V.Phani Kumar

HONG KONG (MarketWatch) — Major Asian stock benchmarks jumped 2% or more on Thursday to end February on a buoyant note, as eased worries over Italy and the U.S. Federal Reserve’s commitment to monetary stimulus boosted investor sentiment.

India’s Sensex
1, -0.08%
fell 0.8% to 18,995.77 in Mumbai afternoon trade, way off the day’s peak at 19,322.28.

The broad regional gains came a day after an Italian debt auction saw a better-than-expected response and Fed Chairman Ben Bernanke’s reaffirmed his commitment to the central bank’s bond-purchase program. Read: U.S. stocks surge in best day since Jan. 2.

“Bernanke was able to alleviate some of the concerns of the costs of the Fed’s current quantitative-easing program, indicating that the central bank has the required ammunition to reduce stimulus to avoid a spike in inflation,” he said.

Nomura economists called the Indian budget “a missed opportunity,” saying the finance minister’s estimate of a 4.8% fiscal deficit for the year ending March 31, 2014 was higher than the brokerage’s expectation of 4.6%.

“From a macro perspective, the budget is disappointing in our opinion as it lacks any expenditure control,” they said. “While the finance minister has, we believe, presented a prudent budget, the question is whether the numbers are achievable. In our view, the growing size of the government is worrying.”

Barclays Capital strategist Jose Wynne said that in addition to supportive monetary policy from the U.S., the Bank of Japan was also “likely to meet the market’s high expectations [on policy easing] soon.”

All three car companies increased the China production in January, for the first time since last year’s flare-up of a territorial dispute between Beijing and Tokyo, according to a report in the Nikkei business daily.

Machinery firm Komatsu Ltd.
6301, -0.56%KMTUY, -0.95%
rose 3.7% after the Nikkei reported separately that the firm is expected to post an operating profit of more than ¥300 billion ($3.25 billion) in the fiscal year ending March 2014, with a slide in the yen forecast to lift earnings.

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